Is pursuing a career in investment banking worth it?

For a long time, a career in finance has been thought to be a progressive career. Evidence suggests – declining revenues across investment banks and growing appeal of jobs in tech – are pushing potential candidates away from finance.
“Yes, the overall industry will decline. It won’t go away, but it’s less appealing than it was in 2010 or 2005.”Brian DeChesare, founder, Mergers and Inquisitions, suggests.

Career-wise investment bankingdemands a second look at the available opportunities and see if it’s worthwhile to make it a long term career.You need to decide if you really want to get into investment banking and if it’s for the right decisions.

To get skills and training

No doubt working as an investment banker offers opportunities to improve a tremendous amount of skills, but a lot of these skills can be learned with courses, investment banking certifications, or by simply taking up some online courses.

Some skills, of course, like how to persuade a client to believe in your investment strategy or dealing with a difficult client will only learn on the job. However, there are other ways to develop these skills. For instance, if you went for sales role at a tech company, you will learn these skills automatically.

Access to PE opportunities

Entry to private equity is a goal for many investment banking professionals. Strategically, it’s a good plan as experience of working at large firms comes handy to get into PE. Though PE firms hire from diverse backgrounds, having investment banking background increases your chances to get into private equity is higher.

Sadly, over the past few years, return in private equity is declining too. In fact, returns in the PE sector have been similar to public market and few hedge funds have come up in the past years.

Given this scenario, investment banking will still be a better opportunity in the long run.

Salary

No doubt investment banking professionals are one of the highest paid workers across industries. As an investment banking analyst, you can expect anywhere between $100k-150k.

If it’s solely about money, you should look at the compensation of software engineers. After a few years on the job, software engineers are paid anywhere between $150k-$160k annually. On top of this, they get stocks, relocation or joining bonus, which takes the total compensation to $200k.

Similarly, product managers at tech companies make similar amount of money. Real estate agents make equally handsome money. If money is the only motive, other options are equally viable.

Talent

For a long time, top talent across U.S top universities have opted for a career in finance. However, it has changed over the last few years. For instance, in 2011, 39% of student went into financial services, while only 31% of students went to finance in 2015 at HBS.

While on the other hand, the number of students turning to tech has increased from 11% to 20% in this period.

Similarly, at Wharton the number of students getting into financial services decreased from 48% in 2008 to 37% in 2015.

Why you should definitely get into investment banking?

Investment banking industry may not be the same as it was a decade ago. It still offers the challenges, thrill, and excitement of working with large companies in their merger and acquisition process.

Dealing with large conglomerate and advising them on their acquisition strategy brings a sense of achievement. Working with CEOs and other smart professionals expands your breadth of knowledge and equips you with more skillset.